Wakilii

Registered Trustees of Freemasons hall v Uganda Revenue Authority (Taxation Application No 20 of 2017)

Tribunal · [2018] UGTAT 3 · 2018 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application challenging the respondent's refusal to grant tax exemption on the ground that the applicant is not a religious institution of public character
Decision
Application for tax exemption dismissed; applicant's rental income held taxable

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Tax Appeals Tribunal dismissed the application for tax exemption, holding that the applicant's trust deed did not establish it as a religious or charitable institution of public character. The Tribunal found that the applicant's objectives, as stated in its trust deed, were limited to acquiring and managing property, not religious or charitable purposes. The Tribunal further held that rental income from hiring the Freemasons Hall to lodges was taxable under s.5 of the Income Tax Act.

Outcome

Application for tax exemption dismissed; applicant's rental income held taxable

Facts

The applicant, Registered Trustees of Freemasons Hall, is a trust registered with the Ministry of Land. It owns and manages Freemasons Hall at Plot 18 Nakasero Road. The applicant applied to Uganda Revenue Authority for tax exemption on the basis that it is a religious entity. The respondent rejected the application on the ground that the applicant is not a religious institution of public character. The applicant objected, and the objection was dismissed. The applicant then filed an application before the Tax Appeals Tribunal. Evidence showed that the applicant receives rental income from lodges of freemasons who hire the hall. The applicant's witnesses testified that freemasons believe in a supreme being and conduct charitable activities such as donating wheelchairs to hospitals. The applicant's trust deed stated its objectives as acquiring and managing property, including letting or hiring out the Freemasons Hall.

Issues

  1. Whether the applicant is an exempt institution under s.2(bb) of the Income Tax Act?
  2. Whether the applicant's income from the hire of the hall is taxable?
  3. What remedies are available to the parties?

Orders

  • Application dismissed.
  • Costs awarded to the respondent.

Rules and key headnotes

Tax Law — Tax Exemptions — Religious and Charitable Institutions — Requirement to Establish Objectives in Trust Deed
To qualify as an exempt organisation under s.2(bb)(B) of the Income Tax Act as a religious or charitable institution of public character, an institution's objectives must be clearly stated in its charter of incorporation, constitution, memorandum of association, or trust deed. Where a trust deed does not establish religious or charitable purposes as the institution's objectives, the institution cannot qualify for tax exemption even if it conducts some religious or charitable activities.
Tax Law — Tax Exemptions — Charitable Activities — Corporate Social Responsibility Distinguished
Charitable activities conducted by an institution as part of corporate social responsibility do not transform the institution into a charitable institution unless charitable purposes are provided for in its memorandum of association or trust deed. For an institution to qualify as charitable, its charitable activities or programs to benefit the poor must be more than de minimis, token, or corporate social responsibility.
Tax Law — Tax Exemptions — Public Character — Membership Restrictions
An institution is not of public character where its membership is not open to women and persons below the age of 21 years and membership is by invitation only. The word 'public' involves an entire community, state, or country, and restrictions on membership based on gender and age preclude an institution from being of public character.
Tax Law — Rental Income — Taxability of Income from Hiring Property
Rental income received by an institution from hiring out property is taxable under s.5 of the Income Tax Act. The property hired out is not an exempt item under the Income Tax Act, and the institution is liable to pay tax on rental income received.
Administrative Law — Tax Appeals Tribunal — Scope of Review — Grounds Not Stated in Objection
Under s.16(4) of the Tax Appeals Tribunal Act, where an application for review relates to an objection decision, the applicant is limited to the grounds stated in the taxation objection unless the Tribunal orders otherwise. A court decision cannot override a clear statutory provision. Where an applicant seeks to introduce a new ground not stated in the objection, the applicant must apply to the Tribunal for an order permitting the introduction of that ground.

Legislation cited (7)

Cases cited (6)

  • Sinba (K) Ltd and 4 Others v UBC and Others (Supreme Court Civil Appeal No. 3 of 2014)
  • R v Registrar General, Ex parte Sargal and another [1970] 3 ALL ER 886
  • Church of New Faith v Commissioner of Pay - roll Tax (Victoria) [1983] HCA 40
  • Ashbury Rly Carriage and Iron Company v Richie (1875) LR 7 HL 653
  • Jehovah's Witness Case [1943] ALR 193
  • Regina v Registrar General, Ex parte Sergerdal [1970] 3 ALL ER 866

Full judgment

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Registered Trustees of Freemasons hall v Uganda Revenue Authority (Taxation Application No 20 of 2017) 2018 UGTAT 3 (20 December 2018)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.